Problem: 53 (Adjusting entries)

Terry Thomas opens the Green Thumb Lawn Care Company on April 1, 2009.
At April 30 the trial balance shows the following balances for selected accounts:
Prepaid insurance Tk. 36,000
Equipment Tk. 2,80,000
Notes payable Tk. 2,00,000
Unearmed revenúe Tk. 42,000
Service revenue Tk. 18,000
Analyzing reveals the following additional data:
i) Prepaid insurance is the cost of a iwo-year insurance policy, effective April 01, 2009.
ii) Depreciation on the equipment Tk. 5,000 per month.
iii) The note payable is dated April 01, 2009. It is a 6 months 10% note.
iv) Seven customers paid for the company's 6 months lawn service package of Tk. 6,000
beginning on April 1, 2009. The customers were serviced in April.
Tk. 15,000.
v) "Lawn Service" provided other customer but not billed at April 30, 2009 totalled
30, 2009.
You are required to prepare the adjusting entries for the month of April
[N.U. B.B.A. (Hons) -2011,2004]
Solution: 53
Green Thumb Lawn Care Company
General Journal
Date Accounts title and explanations L.F Debit Tk. Credit Tk.
Insurance expenses 1,500
2009
Prepaid insurance 1,500
April 30
(Insurance expenses for the month (36,000 + 24) x
l= 1,500
Depreciation expenses-equipment 5,000
Accumulated depreciation equipment 5,000
(Depreciation expenses for the month recorded)
Interest expenses 1,667
Interest payable - Notes payable I,667
|(Interest expenses for the month adjusted)
 Principles of Accounting
4 - 66
Unearncd service revenue 7,000
Service revenue 7,000|
(Unused service revenue carmed recorded)
Accounts receivable 15,000
Service revenue 15,000
(unbilled service revenue recorded

Workings:
i) Insurance expense = 36,000 + 24 = 1,500
ii) Interest expense = 2,00,000 x 10% x,=1.667
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ii) Unearned service revenue earned = (6,000 + 6) x7=7,000
Problem: 54 (Adjusting entries)
Journalize the adjusting entry needed on 30 June, 2010, the end of the current accounting period,
for each of the following independent cases affecting concrod construction:
i) Concord Pays its employees each Thursday. The amount of salaries is Tk. 2,100 for a five
day workwheek (from Sunday to Thursday) and the daily salary amounts are equal. The last week of the
year ended 30 June, 2010, which was Wednesday.
ii) Concord has lent some money. During the current year, the entity has earned accrued interest
revenue of Tk. 750 that it will receive next year.
iii) The beginning balance of supplies was Tk. 2,680. During the year the entity purchased
supplies costing Tk. 6,180, and at 30 June 2010, the inventory of supplies on hand is Tk. 2,150.
iv) Concord is servicing the 'air-conditioning system in a large building and the owner of the
building paid Concord Tk. 12,900 as the annual service fee. Concord recorded this amount as unearned
service revenue. Concord estimates that it has earned on quarter of the total fee during the current year.
(N.U. BBA (Hon's)- 2010]
Solution: 54
Adjusting entries
Date Accounts title and explanations L.F Debit Tk. Credit Tk.
Salaries expense 1,680
Salaries payable 1,680
(To record outstanding salaries)
Interest receivable 750
Interest revenue 750
(To record accrued interest)
Supplies exxpense 6,710
Supplies 6,710
(To recordsupplies expense)
Uneamed service revenue 3,225
Service revenue 3,225
(To record eamed portion of unearned service revenue)
Problem: 55
(Adjusting entries)
The following 2009 information is available concerning the Alam Enterprise, which adjust and
close its accounts every December 31:
1) Bad debts expense is estimated to be 1%
1,90,000. annual sales. The total sales of the year Tk.
2) Salaries accrued but unpaid total Tk. 8.000 on December 31. 2009 and
has not been paid or
recorded.
 4-67
The Adjustments Process &Completing The Accounting Process
3) The utility bill on December for 2,900 arrived on December 31. 2009 and has not been paid
or recorded,
*) Account of supplies indicates are the store supplies account should be reduced by Tk. 800 and
the office supplies account reduced by Tk. 1.600 for supplies used during the year.
5) The Co. holds aTk. I5.000 12%. 6-month note receivable dated September 1. 2009 trom a
customer. The interest in to be collected on the maturity date.
6) An
to be
analysis of the company insurance policies indicates that the prepaid insurance account iS
reduced
by Tk. 2.500 for expired insurance.
? e ncome tax rate is 40% on current income and payable in the first quarter of the nex
year. AsSume that the pre-tax income of the company is Tk. 40,000.
o) Buldings with a cost of Tk. 62.400 30 vear service life and a Tk. 2,400 residual value are to
be depreciated. The straight-line method is to be used.
Instruction: Journalise the necessary adiusting entries at the end of 2009 show Suppouns
calculations in your journal entry with explanations. (N.U. B.B.S (Hon's) - 2009]
Solution: 55
Alam Enterpirse
General Journal (Adjusting entries)
Date Accounts title and explanation L.F Debit Tk. Credit Tk.
(1) Bad debts expense 1,900
Allowance for doubtful account 1,900
(To record allowance for doubtful account)
(2) Salaries expenses 8.000
Salaries expenses payable 8,000
(To record accrued salaries)
(3) Utility expenses 2.900
Utility expenses payable 2.900
(To record unpaid utility expenses)
800
4 Store supplies expenses
Store supplies 800
(To record store supplies expenses)
Office supplies expenses 1,600
Office supplies 1,600
(To record office supplies expenses)
(5) Interest receivable 600
Interest revenue 600
(To record accrued interest on notes receivable)
Insurance expense 2,500
(6
Prepaid insurance 2,500
ng-25/a
rinciplesof (To record insurance expenses of prepaid insurance
Income tax expense 16,000
(7)
Income tax payable 16,000
(To record income tax payable)
Depreciation expense 2,000
(8
Accumualted deprecietion 2,000
(To record depreciation expenses)
Workings:
i) Interest receivable = 15,000 x 12% x=600
4 - 68 Principles of Accounting

ii) Depreciation on Building = Cost-scrap value_ 62400 - 2400 = 2.000

Effective life 30
iii) Income taX expense 40,600 x 40% = Tk. 16,000.

Problem: 56 (Adjusting entries)

The following is the information of Parama Enterprise on June 30, 2009:
Tk. Tk.
Cash 40,000
Accounts Receivable 20,000
Supplies 7.000
Notes payable
12,000
Capital I,00,000
Service revenue
20,000
Travelling expenses 3,000
Salaries expenses 15,000
Rent expenses 4,000
Advertising expenses 6,000
Adjustments:
i) Service revenue recorded as revenue but Tk. 1,200 are unearned on June
30;
ii) Salaries expenses totalling Tk. 1,000 is
payable, but not paid;
ii) Rent paid in advance amounting to Tk. 2,000;
iv) Supplies amounting to Tk. 4,000 have been used:
v) Interest accrued on Notes payable is Tk. 500;
vi) Advertising expenses deferred for the next period
amounting to Tk. 3,000;
vii) Service provided to two customers for total Tk. 8,000 but not
billed.
Instruction: Journalise the adjusting entries on June 30, 2009. (N.U. B.B.S. (Hons) - 2008]
Solution: 56
Parama Enterprise
General Journal (Adjusting entries)
Date Accounts title and explanations L.F Debit Tk. Credit Tk.
Service revenue
1,200
Unearned service reyenue
Unearned service revenue adjustment) 1,200
Salaries expenses 1,000
Salaries payable
(To record salaries outstanding) 1,000
Prepaid rent
Principles
ofAccounting-2
2,000
Rent expenses
(To adjust prepaid rent) 2,000
Supplies expenses
4,000
Supplies
(To record supplies expenses) 4,000
Interest expenses
500
Interest payable
(To record interest expenses payable) 500
 4 - 69
The Adjustments Process &Completing The Accounting Process
Deferred advertising 3,000
3,000
Advertising expenses
(To record deferred advertisenment)
Accounts receivable 8,000
8,000
Service revenue
(To record unrecorded service revenue)

Problem: 57 (Adjusting, closing & Reversing entries)

his business at the end of first year
Mr. Jabbar started a consulting business. The irial balance of
is given below:
Trial Balance
30 June, 2009
Tk.
Tk. 71,600
1,33.000 Service Revenue
Cash 42,600
4,000| Accounts payable 21,300
Supplies
Prepaid rent 4,000| Uneamed service revenue 10,000
5,000 Apprenticeship premium 2,00,000
Prepaid Insurance
Account receivable 43,700| Capital
Furniture 50,000
Office equipment 38,000
18,000
Rent expense 2,800
Utilities expense 8,000
Supplies expense 39,000 3,45,500|
Salaries expense 3,45,500

Adjustment: 8,000.
1 Rent paid in advance Tk.
Tk. 7,000.
2. Supplies total on hand
3. Salary due Tk. 10,000. for five years.
4. Apprenticeship premium was received received Tk. 5,000.
not yet
5. Service revenue receivable but 10%.
Depreciation on fixed assets @
6.
7. Insurance expired Tk. 3,000. the year Tk. 4,000,.
8. Unearned revenue earned during
to:
You are requiredAdjusting entries;
i) Jourmalise the entries; [N.U. B.B.S. (Hons) - 2007]
ii) Give the closing
iii) Reversing entries.
Solution: 57 Mr. Jabbar
Required () (Adjusting entries)
General Journal
L.F Debit Tk. Credit Tk.
explanations
Accounts title and 8,000
Date 8.000
Prepaid rent
Rent expenses
(Prepaidrent adjusted) 3,000
Supplies on hand 3,000
Supplies expenses
on hand)
(To adjust supplies
 Principles of Accounting
4-70
10,000
Salary expenses I0,000
Salary payable
(To adjust salary payable) 8,000
Apprenticeship premium 8,000
Uncarned Apprenticeship premicem
(To adjust apprenticeship premium) 5,000
Accounts receivable
5,000
Service revenue
(To record unrecorded service revenue)
5,000
Depreciation expenses - Furniture 5,000
Accumulated depreciation furniture
(To record depreciation on fumiture)
Depreciation expenses-Office equipment 3,800
3,800
Accumulated depreciation-office equipm.
(To record depreciation on office equipment)
3.000
Insurance expenses 3.000
Prepaid insurance
(To record insurance expired)
Unearned service revenue 4,000
4,000
Service revenue
(Unearmed service revenue earmed)
Required (i) Mr. Jabbar
General Journal (Closing entires)
Accounts title and explanation L.F Debit Tk. Credit Tk.
Date
78,600
Income summary
Rent expenses
10,000
Utilities expenses 2.800
5,000
Supplies expenses (8,000 - 3,000)
Salaries expenses 49,000
Depreciation -Furinture 5,000
Depreciation -Office Equipment 3,800
Insurance expenses 3,000
(To close accounts of expenses)
Service revenue 80,600
Apprenticeship premiun 2,000
Income summary 82,600
(To close accounts of income)
Income summary 4,000
Capital 4,000
|(Totrnasfer net income to capita!)
Required (ii) Mr. Jabbar
General Journal (Reversing entires)
Date Accounts title and explanation L.F Debit Tk. Credit Tk.
2008 Rent expense 8,000
June 30 Prepaid rent 8,000
(To reverse adjustment for rent expenses prepaid)
 4-71
The Adjustments Process &Completing The Accounting Process
Supplies expenses 3,000
Supplies on hand 3,000
(To reverse adjustunent for supplies unused)
Salaries payable 10,000
10,000
Salaries cexpense
(To reverve adjustment for salaries payable)
Uncarned apprenticeship premium 8,000
8,000
Apprenticeship premium
(To reverse adjustment for apprenticeship premium
unearmed)

Problem: 58 (Adjusting entries)

Sinthea Graphics Company was established on January I, 2009 by Silvi Sinthea. At the end of
first year of operations, the Trial Balance contained the following accounting balance:
Credit Tk.
Debit Tk.
Cash 5,600 Notes payable 20,000
Accounts receivable 14,000| Sinthea's capital 22,000
45,000| Graphic Revenue 52.100
Equipment 6,000
Insurance expenses 1,800| Consulting revenue
Salaries expense 30,000
3,700
Supplies expense 1,00.100
1,00,100
Analysis reveals the following additional data:
i) At December 31, Tk. 1,300 of supplies was on hand.
a 12% one year note.
ii) The notes payable was issued on April 1. It is
policy, dated July 1, 2009.
iii) The balance in insurance expense is the premium on a one year
unearned.
iv) At December 31, consulting fees of Tk. 1,100 are
December 13 total of Tk. 2,000.
v) Graphics revenue earned but unrecorded at
vi) Depreciation charged @l0% on equipment per year. IN.U. B.B.S. (Hons) - 2006]
Journalize the adjusting entries at December 31.
Solution: 58
Sinthea Grapich Company
General Journal (Adjusting entires)
L.F Debit Tk. Credit Tk.
Date Accounts title and explanation
Supplies on hand 1.300
1,300
Supplies expenses
(To adjust supplies on hand)
1,800
Interest Cxpenses
Interest payable 1,800
(To record accrucd interest on notes payable)
900
Prepaid insurance 900
Insurance expenses
(To adjust prepaid insurance)
Consulting fee revenue 1,100
Unearned consulting fee revenue 1,100|
|(To adjust unearmed consulting fee revenue)
4 -72 Principles of Accounting
Accounts receivable 2,000
Graphics revenue
2,000
(To record unrecorded graphic revenue)
Depreciation expenses 4,500
Accumulated depreciation 4,500
(To record depreciationexpenses)
Workings:
9
i) Interest on notes payable = 20,000 x 12% x j= 1,800
ii) Prepaid insurance = 1,800 x 6 900
12
ii) Depreciation on equipment = 45,000 x 10% = Tk. 4,500.
Problem: 59 (Adjusting entries)
Kamal is the owner of Microland computer services. At the end of June 2009, his first month of
ownership, Kamal is trying to prepare a monthly financial statement. The following information relates
to June 2009:
At June 30, Kamal owned to employees Tk. 1,800 that will be paid on August 1, 2009.
2 On June1, 2009 Kamal borTOwed Tk. 48,000 from a local bank on a 10years mortgage. The
annual interest rate is 10%
3. Service revenue unrecorded in June totalled Tk. 2.200.
4. Uility expenses of Tk. 400 accrued.
5. Unexpired insurance premium totaling Tk. 700 has expired.
6 Store supplies of Tk. 600 used.
7 Unerned revenue of Tk. 200 has been earned.
[N.U. B.B.S. (Hons) - 2005]
Journalise the adjusting entries.
Solution: 59
Mr. Kamal
General Journal (Adjusting entires)
Date Accounts title and explanations L.FI Debit Tk. Credit Tk.|
2005 (1) Salaries expenses
June 30 Salaries payable 1,800
(To adjust accrued salaries expenses) 1,800
(2) Interest expenses 400
Interest payable 400
(To adjust accrued interest expenses)
(3) Accounts receivable 2,200
Service revenue 2,200
|(To Adjust unrecorded service revenue)
(4) Utility expenses 400
Utility payable 400
(To adjust accrued utility expenses)
(5) Insurance expenses 700
Prepaid insurance 700
(To adjust expense of prepaid insurance)
(6) Store supplies expenses 600
Store supplies
(To adjust store supplies expenses)
600
(7) Uneamed revenue 200
Service revenue 200
(To adjust revenue eamed)

Workings: Interest expenses = Tk. 48,000 x 10% x Tk. 400.

12